Heading To Polls

USD/JPY ground lower Thursday amid broader USD underperformance linked to the aforementioned goings-on surrounding the latest monetary policy decision from the ECB. The rate showed at its worst levels in two weeks.

• Japanese voters will cast their ballots in a general election this Sunday. The LDP are expected to lose some seats, as their candidates face tight races in some single-seat constituencies. Still, the ruling party are expected to maintain majority in the lower house.
• USD/JPY 1-week implied volatility has climbed as the election draws near, it last sits at 7.67% after printing highest levels since mid-March this morning.
• Data released today was net underwhelming. Tokyo core CPI remained at +0.1% Y/Y in October, missing median estimate of +0.3%. Furthermore, the flash reading of September industrial output came in at -5.4% Y/Y, indicating a deeper than expected contraction. The unemployment rate remained at 2.8%.
• Japanese docket next week features final Jibun Bank M'fing PMI (Monday), BoJ Sep MonPol meeting minutes (Tuesday) & household spending (Friday).
• USD/JPY last seen +8 pips at Y113.65. Bulls look to a move through Oct 20, 2021/Nov 6, 2017 highs of Y114.70/73 towards Mar 10, 2017 high of Y115.51. Conversely, a dip through Oct 12 low of Y113.00 would open up Sep 30 high of Y112.08, a recent breakout level.